How Do I Get Out of an MCA Loan?

If facing challenges repaying an MCA loan, then you have to be very proactive about it. You might need to communicate your concerns with transparency to the lender. Discussing hardship assistance options or negotiating adjusted terms may be a possibility.

How Do I Get Out of an MCA Loan?

Merchant cash advance (MCA) loans offer a fast way for businesses to access funds by borrowing against future credit card sales. While the speed and flexibility seem appealing, MCAs also come with some serious risks and downsides to consider.

What Are MCA Loans and Why Do Businesses Get Them?

With an MCA loan, financing companies provide a lump sum payment to a business in exchange for a fixed percentage of future credit card or debit card sales until the balance is repaid plus fees.

The advantage is quick financing that ebbs and flows based on revenue, without set monthly repayment amounts.

Common reasons companies take out MCA loans include:

  • Getting fast working capital to expand or manage cash flow gaps
  • Purchasing inventory or equipment
  • Lacking eligibility for traditional bank loans
  • Needing a quickly and easily approved financing option

However, there are some potential pitfalls to be aware of.

Main Downsides Associated with the Loan

While MCAs provide easy money upfront, they can come at a steep long-term cost, including:

  • They are expensive.  Annualized rates from MCAs often range from 30-50% APR or higher
  • You have Daily repayments. Fixed holdback percentage is taken from credit card sales every day
  • Hard to pay off. Open-ended terms mean companies repay multiples of what they borrowed
  • Locks up income occur. Future sales are promised to the MCA lender

Thinking through the total repayment amount and weighing if it is worth the short-term capital boost is critical before signing an MCA agreement.

How Do MCA Loans Work?

MCA loans provide fast, fairly easy, business financing based on a percentage of future sales or credit card transactions – not your credit rating. Funders advance a lump business capital sum in exchange for collecting small daily repayments until hitting the repayment amount – often within just months.

While easy to qualify, costs stack up quickly through fees and very high APRs sometimes exceeding 100%. Short payback windows also strain cash flow for young companies. Mastering early repayment eases these cash-constrained pressures.

How Do I Get Out of an MCA Loan?

MCA loans provide easy access to fast business funding but can lock you into difficult repayment terms with rates and fees exceeding 50% or higher. Their short payment windows as soon as a few months force businesses repaying the lump sum quickly. This guide covers proactive steps for getting out of an expensive MCA loan to regain financial flexibility.

Follow these best practices to pay off your balance faster or refinance into more manageable business financing.

Method 1 – Pay the MCA Loan Off Early

Paying your MCA loan off ASAP minimizes interest fees accumulating daily or weekly. Ask your MCA lender if discounts apply for paying the full balance early. Even 5-10% discounts add up with these loans ranging $5,000 to $500,000 sizes.

Come prepared with target payment date and repayment amount so lenders prepare paperwork. Check for early repayment penalties too – not all MCA loans charge but some may impose small fees.

Aim to pay at least 20-30% upfront if securing discounts for motivation eliminating debt fast. Take advantage of seasonally strong revenue months as opportunities to repay large chunks too.

Method 2 – Refinance or Consolidate with Another Lender

If cash flow won’t allow full rapid repayment, refinancing your MCA loan tames costs through lower rates and longer terms. Refinancing involves securing new financing that pays off your existing MCA balance.

Top options include:

  1. MCA Loan Refinancing: Receive better MCA terms extended 3+ years.
  2. Bank Loan or SBA Lender: Banks/SBA loans offer lower rates but intensive applications.
  3. Credit Lines: Tap revolving credit lines easier to manage if qualification healthy.

Reduce fees and interest payments through refinanced products bought you time until growing revenue sustainably covers loan payments.

Method 3 – Prioritize Paying MCA Loan First

MCA loans carry grave consequences like garnished revenue or assets seizure if defaulting. Therefore, rank MCA loan payments first before other expenses when paying bills to avoid devastating defaults.

Adopt lean operations temporarily diverting excess revenue directly towards debt repayment ahead of owner salaries, equipment purchases or warehousing upgrades. Protecting revenue streams fueling the business takes priority over lesser expenses in the short run.

Position MCA loans first in line on paydays by setting aside lump sums covering multiple payments at once. Auto-payments help too. Stay disciplined until the balance hits zero.

Method 4 – Boost Profits to Repay Faster

Sometimes debts linger no matter what without revenue expansion. Consider these profit-boosting strategies allowing faster MCA pay-downs:

Price increases – Bump prices 10-15% on services or products if demand withstands it. Funnel that surplus revenue into loan repayment right away.

Upsells – Entice customers purchasing add-ons for 20-30% more transaction value at little incremental cost. Bank the extra margin.

New revenue streams – Add subscriptions, financing, delivery fees generating entirely new high-margin revenue quickly. Divert all of these dollars towards loans.

While boosting sales and multiples ultimately solves cash flow restraints long term, stay laser focused directing every extra dollar in the meantime solely on MCA loan elimination. Live perpetually lean until you’re debt free.

How to Negotiate MCA Debt?

If struggling with MCA loan repayment, contact your lender directly to discuss options openly and honestly. Be prepared with financial statements, projected cash flows, and business plans that give the full picture. Consider requesting:

  • Lower rates if possible
  • Longer repayment term so fixed daily payments are smaller
  • Revised contract with more flexible options should revenue drop

The lender’s goal is getting repaid, so presenting good faith efforts to work with them can further conversations on modifying agreements. Be reasonable regarding ability to repay and terms.

What is the MCA Buyout Option?

Some MCA companies may allow “buying out” the remaining balance of the loan as a lump sum payment to terminate the contract early. This avoids drawn out daily repayments from credit card sales.

Buyout deals often have stipulations like:

  • Must be current on existing payments
  • Certain minimum time in the contract
  • May require a fee equal to a % of open balance

Buying out an MCA returns full control of credit card processing to the business. Ask lenders if they offer formal buyout programs.

Are MCA Loans Bad?

MCAs provide easy short-term financing but can get very expensive long-term without business growth to support repayment. Problems like high rates, tedious withdrawals, and endless payments often fuel negative views.

However, MCA loans match some businesses lacking traditional credit access. With eyes fully open to total costs, and used strategically, they can serve a purpose. As with any financing, great caution in understanding the full commitment is key.

I’ve aimed to provide some high-level starting points on additional areas of inquiry related to MCA loans, while avoiding specific advice. Please let me know if you would like me to modify the approach on what is covered here.


MCA loans offer accessible short-term financing but risk shifting significant portions of future sales and revenue back to the lending company.

Before getting an MCA or if struggling to repay one, carefully calculate total costs, research alternatives tailored to your needs, and seek professional assistance to make informed financial decisions. With proactive management, financially fit options likely exist.

Check Out:

Previous articleProsper Loan: How to Apply for Loan and Login at
Next articleThe Difference Between HMO, EPO, and PPO Health Insurance Plans


Please enter your comment!
Please enter your name here